Starting in the right place
What if risk managers are starting in the wrong place when seeking to design a risk culture? What if instead of focusing on the character of individuals, managers concentrate on creating an organisational context that makes it as easy as possible for people to do the right thing? Would it work? Behaviour science evidence says it will. Furthermore, risk managers may well be able to enlist every member of the organisation as risk partners and co-designers of desired culture.
Sounds too good to be true? It isn’t, and we have the science to prove it.
Intuitively we know that people are changing all the time. The science shows us that one of the main tasks of our brains is to help us adjust our behaviour when our environment or contexts changes. We overestimate the power of individual character and underestimate the power of culture and the influence of workplace colleagues in shaping our behaviour choices.
Perhaps the ubiquitous ethics challenge What ought I to do? isn’t the right starting point for an ethics initiative? Most people know the right thing to do; it is in the doing that they are challenged. It is because of the failure of good people to translate good intentions into actions that bullying remains a systematic issue for many organisations. Perhaps a better starting point would be, to begin with the question: how do we get people to do the right thing? This normative question focuses attention on behaviours and what risk managers can do to influence employee behaviours by drawing on behaviour science findings to better design organisational contexts. The outstanding challenge for risk managers or culture change managers is to design better workplace environments that enable behaviour change to happen naturally.
Designing a better organisational context involves building the appropriate social infrastructure to recognise and respond to employees’ social needs. A better design begins with addressing the many known risk situations in organisations — the ‘known risks’ that regulators have documented — and then working to eliminate them. Critically, addressing known risks means you can forewarn and forearm employees to the organisational cultural risks they will inevitably face.
Twenty years of field research had shown us that organisational policies at best only signal management intent and it is the prevailing culture or more precisely, the dynamics of the social life of the organisation, that is shaping employee behaviour.
The good news is that by seeking to design organisational culture so that it encourages ethical behaviour will also increase employee engagement, diminish bullying behaviour and provide a social landscape that is more conducive for innovation to take root.
Could it be that the Three Lines of Defence framework and Codes of Conduct fail to become embedded in the culture of many organisations because of a lack of social infrastructure to integrate them?
Could it be that most ethics training fails to engage participants because they see themselves as ethical and therefore dismiss training as not relevant to them? Behaviour science research says this is so. Here the field evidence highlights how most risk initiatives are designed to talk to and seek to eliminate poor behaviour instead of leveraging of our self-identity as an ethical person and our social need to feel good about ourselves. Risk managers can leverage personal identities to engage all employees as active participants in managing the risks in their areas as a personal ethical accountability.
Could it be that bullying remains a systematic source of risk in Australian organisations because employees are not skilled in how to ‘speak up’ when they see any issue of concern? These sophisticated interpersonal skills are not innate and need specific workplace training and practice initiatives as part of any organisational learning program.
Behaviour science shows us that relying on courage to speak up is wishful thinking and instead, critical skills need to be attained.
As well as challenging existing assumptions around risk behaviour and how to design risk cultures behaviour science also brings a toolbox to both show and assist leaders and managers get to work on building the types of organisational cultures they want and build the type of skills employees need to co-operate in building cultures of integrity.
Do you know the social levers and barriers that exist in your organisation?
These are the drivers of the behaviours that emerge and prevail in any workplace context. If risk managers do not know them, they cannot mitigate these influential contextual factors leading to conduct and non-financial risks. Measurement metrics are lagging numbers devoid of meaningful social insight; we need to surface these social dynamics before we can make sense of any cultural audits.
What is the dominant language in your organisation?
Is it the survival of the fittest; the battlefield of win/lose or risk and reward; the threat of competition or extinction; the primacy of shareholders. Or, is it about building an eco-system, including supply chain inputs or, caring for each other like a family? Culture is transmitted in words, and risk professionals need to be able to identify how their company’s internal communications are shaping employees’ behaviour. Internal communications are also a key driver of collective behaviour patterns; these need to be aligned to the direction you wish your culture to take rather than the business results you want — just ask scandal-plagued organisations such as Wells Fargo, Volkswagen or Novartis whose focus on results have been found to have come at the expense of a workplace context enabling ethical behaviour to flourish.
What motivates employees?
We have designed most of our reward systems based on the idea that employees are extrinsically motivated when the science shows us they are intrinsically motivated. Most employees leave organisations not because the pay was insufficient, but because the social context was one where they could not get their social needs met. If you want to keep your best employees, you need to know what their social needs are.
What about leadership models?
Is yours still the outdated hierarchical model, or have you moved to a more decentralised and distributed model that recognises employee desires for a say in how they are treated? Excluded employees are quick to take to social media such as www.glassdoor.com.au to let others know your organisation doesn’t offer a socially rewarding experience.
The bedrock of any healthy organisational social infrastructure is recognising our shared humanity and need for fairness, but fairness in all its complexity. We live in a social world and as such, an interpretative world so ‘fairness’ will mean different things to different people. Behaviour science shows us that for some, it is about1:
It is because we live in an interpretative social world that it is critically important that leaders and managers always explain the ‘why’ behind any policy or their organisation’s social change strategy. Providing the desired social information behind decisions around ‘who’ ‘why’ ‘how’ ‘when’ and ‘where’ are the mortar that can be applied to building your social infrastructure. Drawing on behaviour science to design ‘choice’ social infrastructure is a road less travelled but one offering the most promise to risk professionals not wishing to repeat the mistakes of the past but instead learn from the experience.